What's Behind The 3x Rise In SOFI Stock?
SoFi Technologies stock (NASDAQ: SOFI) has seen an increase of over 30% from its lows of below $10 in early April this year to its current value of $13. This rise can mainly be credited to the company's strong Q1 results and an upward adjustment to its annual forecast. Our analysis of SoFi's Q1 performance provides additional insights. Following this recent increase, SOFI stock is trading 190% higher when viewed over a longer duration starting from early 2023. This can largely be attributed to:
We will examine the specifics of these factors. While SOFI stock has performed exceptionally well, if you're looking for potential growth with a smoother experience than investing in a single stock, consider the High Quality portfolio, which has surpassed the S&P and achieved >91% returns since inception. Separately, see – GE Stock To $150?
SoFi's strong revenue growth is driven by its expansion beyond its primary lending business to establish itself as a 'one-stop shop' for financial services. This diversification includes offerings such as SoFi Money (banking), SoFi Invest (investing), and SoFi Relay (financial insights), in addition to its traditional lending services (personal loans, student loan refinancing, and home loans). This approach has resulted in considerable growth in its membership base and product usage. For context, the company's membership base grew from 5.2 million in 2022 to 10.9 million currently. SoFi's 2022 acquisition of Technisys – a cloud-based core banking solution – has been vital for the company. Furthermore, the company acquired a banking charter in 2022, which allows it to hold loans for investment and significantly enhance its deposit base.
Among its segments, Financial Services has exhibited remarkable growth, increasing fivefold from $168 million in 2022 to $822 million last year. This increase is credited to the strong uptake of products like SoFi Money, Relay, and Invest, as well as the swift growth of its Loan Platform Business. The company's Lending segment has also performed well, increasing by 30% over the same period. Although student loan refinancing has traditionally been a substantial revenue source for SoFi, personal loans have become a significant contributor to growth in recent years. The company has secured significant commitments from institutional investors, including Fortress Investment Group and Blue Owl Capital, to purchase its loans, aiding in diversifying its revenue sources and lowering capital intensity.
SoFi's Financial Services segment has been a key factor in the company's financial overhaul, greatly boosting overall profitability. Since 2022, SoFi's operating margin has dramatically improved from -20.4% to 17.2% (for the last twelve months) — an impressive increase. The 2022 banking charter granted to SoFi was a significant landmark, enabling the company to leverage low-cost deposits from its members, especially those with direct deposits, as a reliable funding source for loans. This transition away from pricier financing methods directly benefited SoFi's net interest income and overall profitability. This enhanced financial performance, combined with robust sales growth and commitments from institutional investors, has transformed investor sentiment.
The company's price-to-sales valuation multiple has doubled during this time, rising from 2.6x in 2022 to 5.3x in 2024, which reflects renewed investor optimism. This shift occurred amidst a challenging market backdrop, particularly influenced by the inflation surge of 2022 that triggered a significant stock market downturn.
During this tumultuous period, SOFI stock saw a steep decline, plummeting 83% from its February 2021 peak of $26 down to $4 by December 2022 – a more considerable drop than the S&P 500's 25.4% peak-to-trough decline. The stock has yet to reclaim its pre-Crisis peak.
At its current price of $13, SOFI stock is trading at a price-to-sales (P/S) ratio of 5.3x, which is closely aligned with its four-year average of 5.5x. However, there are strong indicators suggesting that the valuation multiple could see further expansion. Firstly, the company's strategic shift toward higher-margin revenue avenues through its Technology Platform (Galileo and Technisys) and Financial Services segments is attracting investor interest. This transition from a mainly lending-focused model to a more varied, technology-driven approach may prompt the market to assign higher multiples, recognizing the more stable, fee-based income.
Secondly, SoFi's persistent member growth and successful cross-selling are proving to be essential. As the company continues to expand its membership and efficiently cross-sells banking, investing, insurance, and lending products within its integrated ecosystem, investors might attribute a premium to its valuation.
Lastly, and most importantly, SoFi's trajectory toward consistent profitability could serve as a significant catalyst. Maintaining profitability, supported by increased operational efficiency and economies of scale, could lead to a vital inflection point, as financially successful companies in the services sector typically command higher valuations.
While these factors strongly favor SoFi, investors should also weigh the risks involved. SoFi's stock previously declined over 80% during a significant market downturn, highlighting its vulnerability to macroeconomic challenges. With interest rates remaining high and ongoing trade tensions, there exists a risk of a further decline in the stock price.
Certainly, there is always a substantial risk when investing in a single stock, or a limited number of stocks. Consider the Trefis High Quality (HQ) Portfolio which, encompassing a selection of 30 stocks, has a history of successfully outperforming the S&P 500 over the past four years. What accounts for this? Collectively, HQ Portfolio stocks have delivered superior returns with lower risk compared to the benchmark index; providing less volatile experiences, as illustrated in HQ Portfolio performance metrics.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Forbes
a minute ago
- Forbes
New Technical Jewelry Symposium To Premiere At Vicenzaoro Jewelry Fair
The Science of jewelry making and adornment will be part of the September Vicenzaoro jewelry fair For the first time in its 70-year history, the Vicenzaoro jewelry trade fair will host an adjacent gathering dedicated to metallurgy and jewelry manufacturing processes. Called the Vicenza Symposium, it will be held September 2 -4 Vicenza, Italy, prior to Vicenzaoro on September 5 -7. Both events are B2B focused, open only to the jewelry trade. The Vicenza Symposium is modeled after the Santa Fe Symposium with the objective of advancing jewelry making technology, the science of adornment if you will. The three-day event is modeled after the Santa Fe Symposium, founded in 1987 by Eddie Bell, the retired CEO of Rio Grande, an Albuquerque, N.M., company the manufactures, markets and sells jewelry-making supplies. He held his last symposium in 2022 following his retirement. By this time, it was the world's most important event on the technology and science of metallurgy and jewelry making, attracting professionals from around the world. This new event is an attempt to maintain the community that Bell established. In fact, Bell was named honorary president and will deliver opening remarks. There will be 21 white papers delivered during the three-day event on artificial intelligence, 3D printing and other highly technical topics. Presentations will range from 'Gold in the Age of SLM-CNC Interface,' and 'Cracks, pores and other defects in jewellery – their causes and their prevention' to 'Potential of Pt-and-pd-based Bulk Metallic Glasses for Jewellery applications.' It is fitting that it's established the Italian gold jewelry center of Vicenza, known as much for the technology of goldsmithing and jewelry making as well as it is for manufacturing jewels in the tradition of Italian design and style. FEATURED | Frase ByForbes™ Unscramble The Anagram To Reveal The Phrase Pinpoint By Linkedin Guess The Category Queens By Linkedin Crown Each Region Crossclimb By Linkedin Unlock A Trivia Ladder Familiar Names at Vicenzaoro When Vicenzaoro opens September 5 at the IEG's Expo Centre, it will once again be a showplace for internationally known Italian jewelry brands such as Roberto Coin, Annamaria Cammilli, Damiani, Nanis, Fope and Crivelli. The revival of the historic Marina B jewelry brand will also be a focus of the show. The fair attracts important jewelers from Europe and other parts of the world as well including Schreiner Fine Jewellery from Germany, Fabergé from the UK, Etho Maria from Greece, Carrera Y Carrera from Spain, and Statement Paris and D1928 from France. Outside Europe, the Australian pearl jewelry company, Autore, will present its new high jewelry and fine jewelry designs. One of the returning features of Vicenzaoro is 'The Design Room,' for independent high-end designers. This is one of the very few international venues where these designers can have a proper place to show their creations as most international jewelry shows focus on large manufacturers. These designers reinterpret jewelry with unique and exclusive creations. Among the best-known names are Alessio Boschi, whose creations combine culture, history and architecture; Mike Joseph, who focuses of geometric design studded with diamonds; Antonini Milano for lovers of pure yet structured lines; and Karen Suen who combines modern glam with classic jewelry techniques. In addition, there's 'The 8' project, a creation of Boschi, fellow jewelry designers Alessia Crivelli and Luca Daverio, and the goldsmith foundation, Mani Intelligenti. The project promotes new Italian and international jewelry talents. There's also a specific space for the watchmaking brands and accessories, a growing sector of the trade fair with more than 40 exhibitors. All totaled the September Vicenzaoro jewelry trade fair is expected to attract more than 450 buyers from 60 countries who will view the products and services of approximately 1,200 exhibitors from 35 countries. In its 70th year, Vicenzaoro claims to be the world's longest-running jewelry trade event. Vicenzaoro is held twice each year. Following the September show the next fair will be held January 16 – 20, 2026. Vicenzaoro and the Vicenza Symposium is owned and operated by the Italian Exhibition Group (IEG), an international trade show company based in Rimini, Italy.
Yahoo
29 minutes ago
- Yahoo
Better EV Stock: Alphabet vs. Tesla (Hint: Robotaxis Are the Key)
Key Points The future of the auto industry lies in electric vehicles and ridesharing in autonomous vehicles. After many years in service, Waymo still can't point to a timeline of profitability. Tesla also faces challenges with its robotaxi offering, but it's well positioned, provided it can demonstrate safety and efficacy. These 10 stocks could mint the next wave of millionaires › Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) isn't, strictly speaking, an electric vehicle (EV) company. However, its autonomous driving technology company, Waymo, is committed to only using EVs in its fleet. Funnily enough, it could be argued that Tesla (NASDAQ: TSLA) isn't really a pure EV company either. After all, most of its sky–high valuation is attributable to the potential of its robotaxis. However, the comparison of these two as EV companies is valid because the future of the auto industry is EVs, and ridesharing in autonomous vehicles will be a larger part of the industry in the future. But which company is better placed, and which is the better stock? Alphabet vs. Tesla It's entirely possible that Alphabet could decide to spin off Waymo, not least because it reportedly could be valued at more than $45 billion. Meanwhile, one of Tesla's biggest supporters, Cathie Wood's Ark Invest, ascribes 88% of Tesla's enterprise value (market cap plus net debt) to robotaxis in its investment case for the stock, producing an expected value of $2,600 for the stock in 2029. As I have previously discussed, the Ark targets should be taken with a pinch of salt, as its track record on Tesla hasn't been good. However, Ark's core argument is sound and points to Tesla being potentially a far more valuable stock than Waymo ever will be. Pathways to profitability The core argument is that Tesla's business model is scalable to profitability while Waymo's is far less so. The issue of Waymo's profitability arose in a recent CNBC interview with Waymo co-CEO Tekedra Mawakana, where she was asked whether Waymo is profitable. She replied, "We're proving out that it can be a profitable business." When asked when Waymo would be profitable, she replied, "not clear." It's also not clear if Alphabet/Waymo doesn't have an internal forecast for when it will hit profitability, or if Mawakana preferred not to divulge what the company considers an uncertain forecast. However, it's inconceivable that Alphabet is not internally crunching the numbers on this, and if it does decide to spin off Waymo, it's a question that needs to be answered. The point here is that a business that can't be profitable isn't worth anything, let alone $45 billion, so at some point, its management is going to have to set some timelines. Tesla and timelines Whereas investors need to hear more about timelines from Waymo, whose public self-driving ride-hailing service was launched in 2018, there's probably a need for fewer declared timelines from Tesla, or, rather, a need for more accurate ones. For example, in 2019, CEO Elon Musk famously told investors to expect a million self-driving vehicles on the road by mid-2020. In April 2022, he also stated that Tesla aspired to reach volume production of a dedicated robotaxi (Cybercab) in 2024 -- a timeline that has now been pushed back to 2026. These timeline estimates matter because plugging overly optimistic assumptions from them into valuation models can produce dramatically erroneous conclusions. Why Tesla is better positioned With all that said, Tesla has clear advantages over Waymo, provided it can demonstrate safety and reliability and achieve regulatory approvals. Its advantages include: Lower vehicle costs, with Musk aiming for a $30,000 price tag for a dedicated robotaxi, the Cybercab. Meanwhile, Wall Street analysts estimate Waymo's current vehicles cost more than $120,000. In addition, Tesla manufactures its own cars (Waymo does not), and existing Teslas can be converted into robotaxis using Tesla's as-yet-unreleased-to-the-public unsupervised full self-driving (FSD) software, giving Tesla a significant advantage in scaling the robotaxi business. Tesla's use of camera-centric technology is inherently less expensive than Waymo's combination of cameras, light detection and ranging (Lidar) lasers, and high-definition maps. Every Tesla car (robotaxi or not) on the road is effectively a data gatherer, with the data used to improve the AI that powers its AI models. As such, even though Waymo was first, Tesla has significantly more data than Waymo. Which is the better EV stock? Waymo may become profitable in the future, particularly if Lidar costs continue to drop. However, it's challenging to think that it will be a strong competitor to Tesla, provided Musk's company can master safe, unsupervised FSD using a camera-centric approach. That's a big "if" at this stage, but it becomes a smaller "if" as time goes by and Tesla expands its nascent robotaxi offering across new geographies. Tesla's next robotaxi launch is expected to be in Phoenix, as it plans to continue slowly building its robotaxi business. I think Tesla is the better EV stock when comparing Tesla and Alphabet. Should you buy stock in Tesla right now? The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Tesla. The Motley Fool has a disclosure policy. Better EV Stock: Alphabet vs. Tesla (Hint: Robotaxis Are the Key) was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
29 minutes ago
- Yahoo
Trump says he would ‘like' to strike a trade deal with the EU
US President Donald Trump said on Sunday he would 'like' to strike a trade deal with the EU, adding there was a '50-50 chance'.Trump said Sign in to access your portfolio
